Government close to finalizing new investment zones

COME HOME The Cabinet is considering incentives for the new economic zones, such as tax breaks to encourage the return of Taiwanese enterprises

By Shih Hsiu-chuan / STAFF REPORTER

The government will soon finalize a proposal to set up special economic zones to offer incentives for Taiwanese businesspeople based in China to return to invest in the country, Minister Without Portfolio Chu Yun-peng (朱雲鵬) said on Wednesday night.

Chu made the remarks after an inter-government meeting held among government agencies aimed at resolving disagreements on the incentives in terms of tax reduction and the maximum ratio of foreign laborers hired by businesses stationed in the zones.

CONSENSUS

Chu said that officials reached a consensus that businesses in the zones should not be exempt from the country’s minimum wage regulations, but were still at odds over the extent of tax credits and the cap on the number of foreign workers allowed in the zones.

On a possible reduction of the enterprise income tax, the Ministry of Finance had reservations about the Ministry of Economic Affairs’ proposal either to cut the tax by a 25 percent rate to 15 percent or to grant a five-year tax holiday commencing from the date an enterprise begins operations in the zones followed by a two-year 50 percent reduction, an official who wished to remain anonymous said.

OPTIONS

Other options included giving businesses in the zones a three-year tax holiday commencing from the date an enterprise begins operations in the zones and another two-year 50 percent reduction in enterprise income taxes, while the finance ministry preferred to disregard the tax credit, the official said.

The official said that the Council of Labor Affairs also worried about capping the number of foreign workers a business in the zones was allowed to hire at 40 percent — as the economic ministry suggested — would complicate the unemployment problem.

Under current regulations, the cap on the number of foreign workers a business can hire is 40 percent for businesses established in Free Trade Zones, while the upper limit applied to other manufactures in the country is 20 percent.

The official also said that while the selection of the zone is pending, the economic ministry prefers it to be set up within the Taichung Export Processing Zone.